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The House Republican Obamacare Replacement Plan

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It won’t work.

Obamacare works for the poorest that have affordable health insurance because all of the program’s subsidies tilt in their favor.

Obamacare doesn’t work well for the working and middle class who get much less support––particularly those who earn more than 400% of the federal poverty level, who constitute 40% of the population and don’t get any help.

To fix it, House Republicans are proposing a very attractive program for the better off and, with the Medicaid rollback, gutting the program for the poor to be able to pay for it.

The House Republicans are also proposing an individual health insurance market scheme that may even be worse than Obamacare itself.

As bad as the Obamacare individual mandate was for consumers––and as ineffective as it was for insurers––it did cause those not buying health insurance some pain. The Republicans now want to create a scheme that doesn’t require anyone to sign up. But when they get sick enough that they need insurance, they will be able to quickly do so by paying a paltry 12-month 30% premium surcharge.

For example, a person paying $5,000 for health insurance would pay a one-time total $1,500 penalty! A family paying $10,000 in annual premium would pay only a $3,000 penalty for any late enrollment!

Obamacare is so poorly constructed it is literally an anti-selection machine. The Republican proposal is worse.

What the market needs to be viable are not subsidies but a market that works efficiently in the first place.

The House has likely come up with this mess because its various pieces fit the Senate’s budget reconciliation rules. Anything else would require a bipartisan compromise with the Democrats.

I have always believed that Obamacare would have been a lot better if there had been a bipartisan compromise in the first place, with Democrats agreeing to things that would have helped the Republican’s more middle class constituency.

Now, the Republicans are making the same mistake––taking care of their base and giving the Democratic base a lousy deal. That would make this Republican scheme just as politically unsustainable––half the country will hate it––just a different half.

And, the Republican’s guarantee issue scheme of buy it whenever you need it will make the Republican program just as financially unsustainable––too many won’t buy it and those who do will be disproportionately sick.

The real solution is to build a program that is good for both the poor and the middle class instead of constructing one half of the country will always hate.